What is considered as semi-expendable property?
Semi-expendable properties are tangible items which meet the definition and recognition criteria of Property, Plant and Equipment (PPE), but below the capitalization threshold of ₱50,000.00.
Capitalization Threshold refers to the monetary value at which an entity elects to capitalize tangible assets that are used in operations and that have initial useful lives extending beyond a single reporting period.Tangible items are identifiable non-monetary assets with physical substance.Section 23 of the General Provisions of RA No. 11639 or the FY 2022 GAA provides that tangible items [with amount] below ₱50,000.00 shall be accounted as semi-expendable property.
COA Circular No. 2022-004 dated May 31, 2022
Recognition Criteria for Property Plant and Equipment (PPE)
According to the Commission on Audit (COA), a tangible item shall be recognized as property, plant and equipment (PPE) if it meets the following criteria:
PPE are tangible items that are:
a. Purchased, constructed, developed or otherwise acquired;
b. Held for use in the production or supply of goods and services or to produce program outputs;
c. For rental to others (other than investment property);
d. For administrative purposes;
e. Expected to be used during more than one reporting period; and
f. Not intended for resale in the ordinary course of operations.
COA Circular No. 2020-006 dated January 31, 2020
The cost of an item of PPE shall be recognized as asset if and only if:
a. It is probable that the future economic benefits or service potential associated with the item will flow to the entity;
b. The cost or fair value of the item can be measured reliably;
c. Beneficial ownership and control clearly rests with the government;
d. The asset is used to achieve government objectives; and
e. It meets the prescribed capitalization threshold.
COA Circular No. 2020-006 dated January 31, 2020
